“Designing an environment where money drives meaningful change”

Helmy Abouleish, Richard Rugendo, James Shikwati and Bruno Wenn interviewed by Eva-Maria Verfürth and Katharina Wilhelm Otieno

Mr. Abouleish, SEKEM unites sustainability-oriented companies from diverse sectors like textiles, pharmaceuticals and agriculture. Are these sustainable businesses at all profitable?

Helmy Abouleish: Over the last 48 years, my experience has shown that our organic products across all sectors are neither more expensive nor less profitable than conventional products. In fact, when the full health and environmental costs are taken into account, organic, circular and sustainable products are significantly cheaper. We must be bold enough to acknowledge that these production methods are the way of the future.

Can you share an example?

Abouleish: We are currently helping approximately 40,000 smallholder farmers convert to organic and biodynamic agriculture. To facilitate this transition, we are offering farmers ecosystem service payments, specifically carbon credit payments. A smallholder in Egypt, for example, who typically owns no more than two acres, might be reluctant to convert to biodynamic agriculture because he will have to expect lower yields and higher costs in the first few years. Our solution is twofold: Initially, farmers continue to sell their biodynamic products at market price. After a year, they begin to sequester carbon in the soil, plant trees, produce compost and reduce methane emissions. In return, they receive carbon credits that increase their profitability by 40 to 50 percent.

This example shows how international sustainability regulation can actually have a positive impact. Do you know of other regulatory changes that have been particularly effective in fostering economic growth?

Abouleish: At COP27, we successfully lobbied for a voluntary carbon market law in Egypt. Our financial regulatory authority now recognises carbon credits as financial instruments. It has also created an accreditation and governance system and established a platform on the Egyptian stock exchange for trading carbon credits. Ecosystem service payments can be sold domestically. Instead of relying on global buyers, Egyptian companies can now balance their emissions with local carbon sequestration, thereby creating a circular sustainability model within our own economy. As a result, our initiative can expand.

Bruno Wenn: Many governments have also enabled private sector engagement in energy production. An example is Senegal, where German development cooperation has supported the government in creating the necessary legal conditions for private sector investment in the energy sector. The result has been a huge increase in off-grid solutions in rural areas, which have mainly been financed by the Senegalese private sector.

James Shikwati: Kenya’s most cited example is M-Pesa, the mobile money solution developed by Safaricom. The Kenyan government decided to give the private sector an opportunity to innovate in order to improve access to finance. Though the Central Bank of Kenya was sceptical at first, M-Pesa now facilitates millions of transactions a day. People who work in Nairobi no longer have to travel to deliver cash to relatives living in very remote parts of the country. Instead, they can send money using a solution that works riding on the community’s existing cultural practices of extended family support systems. It is important that the private sector be provided with an environment that enables flexibility and innovations to address the challenges that local communities, governments and countries face.

What else does the private sector need to thrive?

Wenn: Governments can create markets, which in turn mobilise significant financial resources within countries. In West Africa, for example, there are large pension funds and insurance companies with substantial capital, but limited investment opportunities in the region. If there were well-developed capital markets, these institutional investors could finance infrastructure projects, especially in the power sector, by purchasing infrastructure bonds. 

This would tap into local currency reserves, thereby avoiding the currency mismatches that sometimes create financial problems and unsustainable foreign debt levels. Take, for example, Mr Rugendo’s situation: When he wants to purchase new machinery from Europe, he typically needs foreign currency. However, his income is in the local currency, meaning that he immediately confronts a currency mismatch. If a local bank could provide financing in Kenyan Shillings, it would be a game-changer.

Shikwati: African countries’ currencies mostly can’t be directly exchanged in international transactions, which makes them practically worthless in global markets. It is difficult to achieve financial sustainability if local currencies cannot be traded internationally. This situation restricts the growth of small and medium-sized enterprises (SMEs) because it makes it harder for entrepreneurs to import necessary equipment or expand their businesses.

Richard Rugendo: We also need to invest in human capital. A healthy, well-educated population is a prerequisite for boosting productivity and innovation. Without it, even the best financial mechanisms will have a limited impact.

What role do regional economic communities play in these processes?

Wenn: A significant one. Access to markets is essential for business growth, therefore infrastructure that connects countries is essential. But even if cross-country infrastructure is available, trucks in East Africa often spend days at border crossings due to differing regulatory standards between neighbouring countries like Kenya and Tanzania. Regional economic communities could help by introducing uniform standards. And by doing so, reduce the bureaucratic inefficiencies that drive up costs for the consumers. 

Rugendo: As a company owner, I think initiatives like the African Continental Free Trade Area (AfCFTA) are promising. In the food industry, bureaucratic hurdles often create excessive border delays that can spoil perishable goods.

Climate and development financing schemes are often criticised. Mr. Shikwati, where does international development financing go wrong?

Shikwati: The existing models of financing seem to be designed to develop markets for wealthier countries instead of enabling poor countries to develop their own markets for their own products. Take the example of food security: Development finance tends to prioritise the cultivation of large-scale cash crops like wheat, sugarcane or cotton. However, planting these crops in sub-Saharan Africa sometimes requires significant ecological alterations, which ultimately accelerate climate change. Indigenous crops are naturally adapted to local conditions. Yet, when we advocate for African vegetables like cowpeas or jute mallow, financing institutions often dismiss them. This raises a critical question: Who is development actually serving? Are we creating markets for industrialised nations, or are we helping poor countries develop their own? Development finance must undergo a fundamental mindset shift to support self-sustaining, locally driven growth.

Can you elaborate on this point? How can development finance help build sustainable economic structures and act as a catalyst for positive economic development?

Shikwati: Development finance frequently relies on external guidance from industrialised countries, which often monopolise expert advice to companies on climate change and sustainability strategies. This approach leads to superficial compliance rather than genuine adoption and integration. Governments in Africa mirror generic policies and solutions from Europe and the USA in total disregard of local cultural and ecological realities. To be effective, sustainability strategies must be context specific, tap into indigenous knowledge insights on climate change challenges and tailored to local conditions rather than imported wholesale from developed economies.

Wenn: Policies, as decided by European or German policymakers, can become a nightmare for local businesses in developing countries. The sheer number of standards and compliance requirements creates major cost barriers, stifling private sector growth. The most important private sector companies are local. The key question for development finance should be: How can we help them to scale up the services and to grow? The answer is by supporting legal stability, predictable taxation, good business environment and investment in infrastructure like roads, energy and water supply. 

Mr. Rugendo, you have received support from development financing institutions, including German DEG (Deutsche Investitions- und Entwicklungsgesellschaft). What challenges have you encountered?

Rugendo: We need to address distortions in development finance. Even when a development financing institution provides funding at reasonable conditions, by the time it reaches entrepreneurs through commercial banks, the interest rates have often become inflated. Banks, of course, aim for maximum profit – but when part of their funds come from development money, we should question whether they’re being used as intended.

Wenn: Development finance depends on the strength of local banking systems in developing countries. The important question is whether these banks are both willing and able to support SMEs. However, this is not just about the banks – it’s also about government policies. Take the example of some African countries, where finance ministers frequently issue treasury bills at very high interest rates. How can we expect local banks to take on the higher-risk, more complicated task of issuing small loans to SMEs when they have the option of buying treasury bills instead? This is why policy matters. Governments must implement prudent fiscal management that does not absorb all domestic financial resources, but instead ensures that capital remains available for the private sector.

Can you give an example of how this might work?

Wenn: In India, banking regulation incentivises banks to provide more financing for SMEs. The Reserve Bank of India mandates that a specific portion of bank portfolios be allocated to SMEs. Domestic resource mobilisation is an area that is often overlooked by policymakers in donor countries. There is significant capital available within developing economies, but the real question is how to effectively mobilise and utilise these resources for development. Wherever there is a market demand, entrepreneurs emerge to address it. I often wonder why governments do not leverage this more effectively: Why not actively engage entrepreneurs in providing essential services like clean water, quality education and healthcare? Profit-driven models and development goals are not necessarily at odds.

In many low-income countries, there is already a whole range of public-private financing models that support health and education services, for example. But this privatisation of health and social services creates problems because the poor are not able to pay for them. How can development finance institutions and the private sector ensure that the services provided by private companies are accessible to all?

Shikwati: The key is a strong regulatory framework that ensures transparency and accountability. Take M-Pesa again – the Central Bank of Kenya stepped in to establish regulatory safeguards to ensure fair competition and consumer protection. Governments must always regulate companies, not the other way around.

Wenn: I agree, but the private sector can contribute to public services only if a robust and independent regulatory environment is in place. This means government interference should be limited once the rules are set. Regulation must include transparency, procurement oversight, and checks and balances to prevent exploitation.

Despite all these obstacles, the private sector continues to defy the odds. What motivates both emerging and seasoned entrepreneurs to take this path?

Abouleish: The key to making a real impact is to have a clear vision of the future you want to achieve. If you know what you want things to look like in 20 years, that vision gives you purpose, drive and courage. You create the world around you. Taking ownership – of your future, your destiny and your impact – is a crucial starting point.

Rugendo: Overcoming barriers requires a combination of market evolution, leadership, commitment, innovation and consumer engagement. A sustainable and socially responsible business environment doesn’t emerge on its own – it has to be shaped. There’s a lot that both the private sector and regulators can do. We live in a global village, and markets are interconnected. 

Mr. Wenn, what should the international development community keep in mind? 

Wenn: The private sector is crucial for development because it can create both income and jobs. What we need is dialogue: Development cannot be achieved by governments alone; solutions must be created in cooperation with the private sector. The issue isn’t a lack of money – it’s about designing an environment where money drives meaningful change. 

James Shikwati is the founder-director of the Inter Region Economic Network, a Kenyan think tank.
james@irenkenya.com 

Helmy Abouleish is an entrepreneur and CEO of the Egyptian initiative SEKEM. 
PR@sekem.com   

Richard Rugendo is an entrepreneur and founder of Kevian Kenya Limited.

Bruno Wenn is the former Chairman of EDFI, the European Development Finance Institution.
https://www.deginvest.de/